Citi bullish on Indian equities, sees Nifty at 28,000 by end-2027

The target implies an upside of about 12% from the Nifty 50's last close of 24,986.4.

Indian equities have until recently lagged global peers as enthusiasm around the AI trade and elevated crude oil prices weighed on the outlook for the world's third-largest oil importer.

Citi's bullish outlook comes after the benchmark Nifty 50 surged more than 10% over the seven sessions through Friday, buoyed by a resurgence of foreign portfolio investors (FPIs) as AI-linked trades unwound and oil prices retreated.

"Over the past two years, AI has crowded out almost everything else. Our analysis suggests a ~100bp increase in India active weight could drive ~$12bn of inflows," Citi said in its India equity strategy note dated November 8.

Sentiment towards Indian equities improved after a Democratic victory in the US midterm elections fuelled expectations of slower AI-related capital expenditure and lower oil prices, on hopes for an end to the conflict involving Iran.

"Post US mid-terms, risks of increased pace of data center moratoriums has aided rotation into other assets, (and this) could continue to benefit India," Citi said.

FPIs have bought Indian shares worth over $4.1 billion so far in November, already their biggest monthly inflows since September 2024.

Citi raised its price-to-earnings multiple for Nifty 50 to 18x from 17x, leading to the target of 28,000 points. It earlier expected the 50-stock index at 26,000 by September 2027.

"Lower oil price could help India's macro and earnings assumptions. A $10 (per barrel) lower oil price would help (current account deficit) by 30-40 bps and inflation by 50 bps," the brokerage firm said.